MUMBAI: Stocks of Future Lifestyle Fashions rose 7.8% to hit its 52-week high during Friday’s trade after the company transferred its holding in various investee brands to a wholly-owned subsidiary FLFL Lifestyle Brands, in efforts to raise Rs 450 crores worth funds.

The stock’s total traded quantity rose forty times, with 40 lakh shares exchanging hands compared to its two week average traded quantity of 91 thousand shares.

Future Lifestyle Fashion will now hold 49% stake in FLFL Lifestyle Brands, while the investee companies will continue to be run independently by their respective entrepreneurs and professionals.

Emkay Global Financial Services has a buy on the stock with a target price of Rs 316. It said value unlocking in investee brands will help deleverage the company’s balance sheet. “We believe FLFL's unique business model, consisting of owned & licensed brands, investee brands and retail outlets stand to benefit from the growing shift towards organised retail and increasing brand awareness. Furthermore value unlocking in brands (eg. Lee Cooper) will aid in deleveraging the balance sheet. We have valued FLFL at 12x FY19E EV/EBITDA, 33% premium to that of Shoppers Stop."

The company had transferred its Lee Cooper business to a wholly-owned arm Future Speciality Retail by way of a slump exchange on a going concern basis.

Emkay expects improved mix and operating leverage in the company’s overall business to drive EBITDA margin by 60bps over FY16-19E to 10.5%.

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